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Cedigaz: LNG market to grow by 2.1 - 2.5% in 2015

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LNG Industry,

Cedigaz’s first estimates of the global LNG market for the 1Q15 showed changing dynamics compared to the previous year. 2Q15 estimates confirm this trend as:

  • The Asian market remained soft with lower demand and increased output in the Pacific Basin.
  • European net imports grew as gross imports increased and re-exports collapsed.
  • Emerging players, like Egypt or Pakistan, are now integrated in the market.
  • In the US, the LNG rush is coming to an end. Overall, the outlook for 2015 sees a 2.1% to 2.5% growth y/y of the global LNG market to 240-241 million t.

In Asia, LNG average import prices continued their fall in 2Q15, albeit at a slower pace than in 1Q15, in line with the slowing down in oil prices decline in the previous months. Overall, from January to June, average import prices fell by 43.2% in Japan, 36.2% in South Korea and 14.2% in China.

In Japan, Cedigaz expects long-term prices to decline further, from US$9.8/million Btu in October to US$7.2/million Btu in December. Average import prices are expected to reach US$8.5/million Btu on average in 4Q15, assuming an average spot LNG price of US$7.4/million Btu.

LNG purchases of Asian top 3 buyers, Japan, South Korea and China, decreased by 6.2% y/y in the second quarter of 2015, from 32.4 million t to 30.3 million t. The decrease was pulled by a 7.5% drop y/y in Japan (-1.5 million t) and a 7.5% drop in South Korea (-0.5 million t).

In South Korea, demand for LNG fell due to above average temperatures, the negative impact of Asian economic turmoil on industrial production, and increased competition from coal in the power sector. In China, imports grew by 2.5% year-on-year in 2Q15 but decreased overall by 3.8% y/y in 1H15 from 9.9 million t to 9.5 million t as a consequence of the slowdown of natural gas demand growth in the country and increased pipeline imports.

In Europe, LNG net imports grew by 16.8% y/y in 2Q15, following a 35.9% y/y growth in Q1. In 2Q15, Europe imported 8.71 million t of LNG against 7.46 million t in 2Q14. To a lower extent than in the first quarter of the year, Northwest European markets continued to absorb flexible LNG diverted from Asia. In Spain, the largest importer in Europe, LNG net imports rebounded significantly, from 1.31 million tons in 2Q14 to 2.07 million t in 2Q15 (+57.9%), as reloaded volumes collapsed by 66.4%, from 1.4 million t to 0.47 million tons and as natural consumption was boosted by the power sector.

In the rest of the world, the weight of LNG new players has grown over the 2Q15. During this period, the group of three new importers composed of Pakistan, Egypt and Jordan received about 1 million t of LNG, including 0.68 million t from Qatar. In the US, signs of the end of the rush for LNG projects begin to show: no new project has applied for an export license to the Department of Energy during the quarter (this had not happened since 1Q11), the first withdrawal from the FERC process by a project was announced by Excelerate Energy, and more FID schedules are facing increasing delays.

Edited from press release by

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